H&M Shares Jump on ‘Flattish’ Sales in Q2
PARIS — H&M blamed the weather.
In a brief trading note, the fast-fashion behemoth reported “flattish” net sales in constant currency for the three months from March 1 to May 31, compared to the same time period last year.
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“Sales in the second quarter were affected by unfavorable weather conditions compared to the corresponding period last year on several of the H&M group’s large markets,” the company said in a statement.
Net sales in Swedish kronor were up 6 percent to 57.6 billion Swedish crowns, or 4.95 billion euros.
Business is picking up with June “off to a good start,” the group said, which also operates the Arket, Cos, Monki, & Other Stories and Weekday brands in addition to its H&M cornerstone stores.
The stock jumped nearly 7 percent in morning trading. Shares finished the day up 3.67 percent at market close.
RBC Europe analyst Richard Chamberlain highlighted that positive note, adding that the third-quarter results should be boosted by “warmer weather and positive calendar impacts.”
The company is struggling to find a sweet spot between its go-to basics and high-end designer collaborations, Chamberlain noted. “We think it will try to elevate its offer without compromising its value for money credentials, but this may increase execution risk,” he added.
The company took a significant hit from closing its Russian business, which continues to have a lasting impact on its results year-over-year.
H&M is working to improve its online and offline integration, as competitors such as Inditex’s Zara and Mango focus on omnichannel development. Inditex beat market expectations in results reported June 7, with net sales up 13 percent in the first quarter.
The company should benefit from increased supply chain stability moving forward. “We think product flow has improved, and we expect price reductions from Asia suppliers due to a softer global buy,” added Chamberlain.
H&M will report full financial results for the first half of the year on June 29.
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